Two timberland REITs are joining forces to create the second-largest publicly traded wood products company in North America as the White House’s lumber tariffs go into effect.

Rayonier Inc. and PotlatchDeltic Corp. announced the merger in a Tuesday press release. The combined venture will be worth $7.1B with $1.1B of net debt.

Rayonier CEO Mark McHugh, who is slated to hold the same position at the new venture, called the move a “strategic merger of equals” in a statement. It is expected to receive regulatory approvals sometime in the first half of 2026.

After the merger, the company would control about 4.2 million acres of timberland, including roughly 3.2 million in the South and approximately 930,000 in the Pacific Northwest. Its holdings would also include seven wood product manufacturing plants.

Rayonier shareholders would control about 54% of the company, while PotlatchDeltic investors would own the rest.

The deal comes as President Donald Trump’s 10% tariff on imported softwood lumber goes into effect Tuesday. This came after the duty on Canadian timber imports was raised from 15% to 35% in August.

The policies are expected to be a boon for the domestic lumber players like Rayonier Inc. and PotlatchDeltic, The Wall Street Journal reported.

Lumber futures have seen a great deal of movement in recent years, and the volatility has only become more intense as tariffs have been rolled out.

Prepandemic, they rarely traded for more than $450 per thousand board feet. Increased demand from homebuilders and restaurant owners constructing outdoor dining spaces during the shutdown led to a May 2021 peak of $1,686.

Lumber futures plunged 23% early last month amid muted construction activity due in part to high materials prices. The metric sat at $620 on Tuesday.

This came after lumber costs rose sharply in March as the Department of Commerce launched an investigation into the national security impact of lumber imports from nations like Canada, Brazil and Mexico.